Question
During the period from 2011 through 2015 the annual returns on small U.S. stocks were - 3.40 percent, 19.00 percent, 45.65 percent, 3.23 percent, and
During the period from 2011 through 2015 the annual returns on small U.S. stocks were - 3.40 percent, 19.00 percent, 45.65 percent, 3.23 percent, and - 3.80 percent, respectively. What would a $1 investment, made at the beginning of 2011, have been worth at the end of 2015? (Round answer to 3 decimal places, e.g. 52.750.)
Value in 2015-? |
2. Sandra recently invested in real estate with the intention of selling the property one year from today. She has modeled the returns on that investment based on three economic scenarios. She believes that if the economy stays healthy, then her investment will generate a 30 percent return. However, if the economy softens, as predicted, the return will be 10 percent, while the return will be -25 percent if the economy slips into a recession. If the probabilities of the healthy, soft, and recessionary states are 0.5, 0.4, and 0.1, respectively, then what are the expected return and the standard deviation of the return on Sandras investment? (Round answers to 3 decimal places, e.g. 0.125 and round intermediate calculations to 5 decimal places, e.g. 0.07680.)
Standard deviation?
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